Crowdfunding Site for Loved Ones in Need Raises Funding from Founder Collective, First Round Capital, and Others
GiveForward, a crowdfunding platform designed to help people raise money for friends and family members in need, has announced a $2 million Series A funding round led by Founder Collective and First Round Capital. The investment also includes participation from Naval Ravikant’s Firestarter Fund. While the terms of the deal have not been disclosed, this significant infusion of capital will undoubtedly aid GiveForward in its mission to make fundraising easier for those who need it most.
A Brief History of GiveForward
GiveForward has come a long way since its inception as an incubatee at Excelerate Labs in Chicago. The company has received seed funding from notable angel investors, including New World Ventures and David Cohen, among others. In 2011, GiveForward secured a $500,000 angel round, which laid the foundation for the platform’s growth.
How GiveForward Works
Unlike other crowdfunding sites like Kickstarter, GiveForward is specifically designed to help individuals raise money for their loved ones during difficult times. The company boasts over 3,000 active fundraisers, who are estimated to raise between $25 and $30 million in 2012. As CEO Desiree Vargas Wrigley noted in a press release, "GiveForward is more about friends helping friends." However, she also pointed out that people often struggle with asking for financial support directly.
A Recent Success Story: Sarah Burke’s Fundraiser
One notable example of GiveForward’s success was the fundraiser set up by friends for X-Games free-skier Sarah Burke after her tragic accident in January. Within 72 hours, the page had raised an impressive $300,000 to help Burke’s family cover medical expenses.
The Business Model: A 7% Fee on Donations
While GiveForward has been successful in its mission to provide a platform for fundraising, it is essential to note that the company takes a 7% fee on all donations. This means that of the $300,000 raised for Burke’s family, approximately $21,000 went directly to GiveForward. As one might expect, this raises questions about whether using the platform is more beneficial than simply donating directly.
Update from GiveForward Co-Founder Ethan Austin
In response to concerns about the 7% fee, GiveForward co-founder Ethan Austin emphasized that their model includes all fees associated with credit card processing and other expenses. He also noted that the company’s cut is lower than many competitors’, who charge between 8% to 10%. However, some sites may have slightly lower fees.
Why GiveForward Couldn’t Be a Non-Profit
Austin explained that due to the structure of their platform, which involves directly disbursing funds to individuals on a large scale, GiveForward could not operate as a non-profit organization. He highlighted the importance of trustworthiness for donors and the simplicity of using the platform for page owners.
Conclusion
The $2 million Series A funding round is a significant milestone for GiveForward, which aims to make fundraising more accessible and efficient for those in need. With this capital injection, the company will undoubtedly continue to grow and improve its services. As we move forward, it’s essential to consider the implications of using crowdfunding platforms like GiveForward and whether they provide the best value for donors.
About the Author
Billy Gallagher is a former TechCrunch staffer and author of "HOW TO TURN DOWN A BILLION DOLLARS: The Snapchat Story by Billy Gallagher." He previously worked as an analyst at Khosla Ventures.
